# Over the Counter Terms: A Glossary

> Principal and agency desks, internalisation, firm quotes and settlement arrangements, defined.

- Source: https://thecoinreference.com/otc-terms-glossary/
- Published: 2026-07-16
- Author: Reference Desk
- Publication: The Coin Reference — Facts, dates and numbers, kept current
- Topic: otc
- Tags: glossary, otc, definitions

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**Over the counter.** A trade executed bilaterally between two parties rather than on a public venue.

**Principal desk.** A desk that trades from its own book and is your counterparty. It carries the position until it unwinds.

**Agency desk.** A desk that locates a counterparty and charges a commission. Your counterparty is whoever they found.

**Firm quote.** A price the desk commits to for a stated size and a stated period, typically seconds.

**Indicative quote.** A price that is not committed. Distinguish before assuming.

**Implied spread.** The quoted price expressed as a percentage against the market mid at the moment of the quote. The only figure comparable between desks.

**Internalisation.** Matching a client trade against an opposing client rather than going to market. Produces the tightest pricing because there is no market impact.

**Inventory.** Assets the desk holds. A desk long an asset quotes differently from one that must source it; the largest invisible cause of quote variation.

**Market impact.** The adverse price movement caused by an order consuming available liquidity. The cost a desk quote is designed to avoid.

**Displayed depth.** Resting orders visible on a venue. An upper bound on what will fill, typically overstating by a factor of two to three at meaningful size.

**Realised cost.** The average execution price against the mid at submission. The only reliable measure of what an execution actually cost.

**Settlement risk.** The exposure created when one party transfers before the other. The structural problem in bilateral trading.

**Delivery versus payment.** An arrangement where both legs settle simultaneously, removing settlement risk.

**Settlement agent.** A regulated entity holding both legs of a bilateral trade and releasing them together.

**Tranching.** Splitting a trade into alternating smaller transfers to bound settlement exposure. Inefficient and sometimes the only option available.

**Best execution.** An obligation on some regulated entities to take sufficient steps to obtain the best result for a client. Typically evidenced by requesting and recording multiple quotes.

## Where these terms appear

Implied spread, firm quote and displayed depth are all measurable during an ordinary trading week, and recording them is what converts this vocabulary into a usable picture of your own execution costs.

Settlement risk and the settlement agent are the terms that matter before a first bilateral trade rather than during one. [A regulated crypto OTC desk](https://collectnexchange.cy/services/crypto-otc) will document its settlement mechanics as a standing arrangement rather than negotiating them per trade, which is the distinction worth looking for.

Internalisation and inventory explain most of the variation between desk quotes and neither is observable, which is why simultaneous comparison across two or three desks is the only reliable method. [A provider quoting size directly](https://collectnexchange.cy/services/crypto-exchange) gives a reference point for what the public market can absorb before a desk becomes the correct venue.

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This article explains how something works. It is not financial advice.
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